OUTLINE

This Bill will introduce several
measures affecting, primarily, the Families, Housing, Community
Services and Indigenous Affairs portfolio, including two Budget
2011-12 measures and a Budget 2009-10 measure.

Bereavement
allowance

The Bill gives parenting payment
recipients access to bereavement allowance on the death of a
partner.

Special
benefit

The Bill aligns access to
special benefit for certain visa holders with other migrants, by
removing the family member exemption from the two year newly
arrived resident’s waiting period before special benefit is
payable. The amendments support the Budget 2011-12 measure
Provisional Partner Visa Holders - Entitlement to Special
Benefit .

Impairment Tables for
disability support pension

As part of the Disability
Support Pension - Better and Fairer Assessments 2009-10
Budget measure, the Government undertook to update the Tables
for the Assessment of Work-related Impairment for Disability
Support Pension (the Impairment Tables) to ensure that they are
consistent with contemporary medical and rehabilitation
practice. The Bill removes the current outdated Impairment
Tables from 1 January 2012, and enables the Minister to introduce
new Impairment Tables through a legislative instrument.

Disability advocacy
services

The Bill provides for the
introduction of a third party certification quality assurance
system for disability advocacy services. The new quality
assurance system will provider greater assurances about the quality
of disability advocacy support, by introducing mechanisms
independent from government to assess the compliance of disability
advocacy services against a tailored set of new Disability Advocacy
Standards.

Asset-test exempt income
streams

The Bill makes a number of amendments
aimed at enhancing and improving the integrity of treatment of
certain asset-test exempt income streams.

Termination
payments

The Bill clarifies that payments
made by an employer to an employee in lieu of notice of termination
are regarded as redundancy payments for the purposes of the social
security law.

Financial impact
statement

Bereavement
allowance

Total
resourcing

2011-12

2012-13

2013-14

2014-15

$0.2 m

$0.2 m

$0.2 m

$0.2 m

Special
benefit

Total
resourcing

2011-12

2012-13

2013-14

2014-15

0.2 m

-11.3 m

-13.4 m

-13.6 m

Impairment Tables for
disability support pension

This Bill gives
effect to the final component of the 2009-10 Budget measure
Disability Support Pension - better and fairer
assessments, which also included: fast tracking for claimants
who are clearly or manifestly eligible for disability support
pension; the introduction of assessments for disability support
pension being undertaken by Senior Job Capacity Assessors; the
establishment of the Health Professional Advice Unit within
Centrelink; and new payments for claimants’ treating doctors
when they provide additional diagnostic or further information at
the request of the Health Professional Advice Unit. These
measures form an integrated package and the costs of each component
cannot be disaggregated. The financial impacts provided are
the impacts of this integrated package.

Total
resourcing

2009-10

2010-11

2011-12

2012-13

$13.9 m

$19.1 m

- $4.8 m

- $35.4 m

Disability advocacy
services

Funding for this measure was
introduced in the 2007-2008 financial year and is linked to the
costs incurred in the three-year certification cycle under this
measure. Costs are higher in the 2011-2012 financial year due
to one-off costs associated with practical supports to assist
disability advocacy services achieve certification.

Total
resourcing

2011-12

2012-13

2013-14

2014-15

$1.02 m

$0.74 m

$0.69 m

$0.61 m

Asset-test exempt income
streams

Nil impact.

Termination
payments

Nil impact.

SOCIAL SECURITY
AND OTHER LEGISLATION
AMENDMENT BILL 2011

NOTES ON CLAUSES

Clause 1 sets out how the Act is to be
cited, that is, as the Social Security and Other Legislation
Amendment Act 2011 .

Clause 2 provides a table that sets out
the commencement dates of the various sections in, and Schedules
to, the Act.

Clause 3 provides that each Act that is
specified in a Schedule is amended or repealed as set out in that
Schedule.

This explanatory memorandum uses
the following abbreviation:

‘Social Security
Act’ means the Social Security Act 1991 .

Schedule 1
- Bereavement
allowance

Summary

This Schedule gives parenting
payment recipients access to bereavement allowance on the death of
a partner.

Background

Paragraph 315(1)(c) of the
Social Security Act precludes a parenting payment recipient from
qualifying for bereavement allowance on the death of his or her
partner. The original intent of the legislation was that the
surviving member of a couple who had dependent children would
continue to receive parenting payment (single), rather than
transferring temporarily to the equivalent of bereavement allowance
and then back to parenting payment (single). Historically,
there was no financial advantage in transferring between these
payment types.

The introduction of the Secure
and Sustainable Pension Reform package in September 2009 saw a
substantial increase to the single rate of certain pension types,
including bereavement allowance. Allowing parenting payment
recipients to transfer temporarily to bereavement allowance will
provide additional assistance during a difficult time.

The amendments made by this
Schedule commence on 1 January 2012.

Explanation of
the changes

Item 1 repeals paragraph 315(1)(c) of
the Social Security Act. In doing so, it allows persons
qualified for a parenting payment to transfer to bereavement
allowance during the 14 week bereavement period under the Act.
This removes the current financial disadvantage that affects
parenting payment recipients, compared to other income support
recipients who are in the same circumstances.

Item 2 provides that the amendments
made by this Schedule apply in relation to deaths occurring on or
after the commencement of this Schedule.

Schedule 2
- Special benefit

Summary

The Schedule aligns access to
special benefit for certain visa holders with other migrants, by
removing the family member exemption from the two year newly
arrived resident’s waiting period before special benefit is
payable. The amendments support the Budget 2011-12 measure
Provisional Partner Visa Holders - Entitlement to Special
Benefit .

Background

Temporary visa holders may qualify for special benefit if
the visa is included in a class of visas set out in a determination made
by the Minister under subparagraph 729(2)(f)(v) of the Social
Security Act.

Currently, special benefit is
payable to these temporary visa holders on arrival in Australia if
suffering hardship, whereas other migrants would be subject to the
newly arrived resident’s waiting period and must wait two
years before special benefit is payable, unless they can
demonstrate both financial hardship and a substantial change in
circumstances beyond their control after arrival in
Australia.

An exemption from the newly
arrived resident’s waiting period is provided to a ‘family member’ under paragraph 3(1)(e) or (g)
of the Social Security Legislation Amendment (Newly Arrived
Resident’s Waiting Periods and Other Measures) Act
1997 . Paragraph 7(6D) of the Social Security Act defines
a ‘family member’ as a ‘partner’ or a
‘dependent child’ in relation to
paragraphs 3(1)(e) or (g).

As a result, unlike other newly
arrived migrants, these temporary
visa holders can receive special benefit much earlier than migrants
entering with permanent visas.

As a result of the changes made
by this Schedule, in respect of claims for special benefit
lodged on or after 1 January 2012, the exemption from the
newly arrived resident’s waiting period will no longer apply
to a holder of a visa that is in a class of visas determined under
both subparagraph 729(2)(f)(v) and subsection 739A(8)(c) of
the Social Security Act, unless another exception applies (such as
demonstrating a substantial change of circumstances after their
arrival in Australia).

This change means that
Provisional Partner Visa Holders will need to demonstrate that they
have experienced a ‘substantial changes of circumstances
beyond their control’ after arrival in Australia, in addition
to financial hardship, in order to access special
benefit.

Explanation of
the changes

Item 1 inserts new subsection 739A(8)
into the Social Security Act.

This subsection provides that
paragraphs 3(1)(e) and (g) of the Social Security Legislation
Amendment (Newly Arrived Resident’s Waiting Periods and Other
Measures) Act 1997 do not apply to a person if the person makes
a claim for special benefit on or after 1 January 2012 and the
person holds a visa that is in a class of visas determined by the
Minister under subparagraph 729(2)(f)(v) of the Social
Security Act and is in a class of visas determined by the
Minister for the purposes of new paragraph 739A(8)(c) of the Social
Security Act.

As a result, a person who holds
such a visa will be subject to the newly arrived resident’s
waiting period under section 739A of the Social Security Act,
unless the Secretary is of the opinion that the person has suffered
a substantial change in circumstances beyond the person’s
control under subsection 739A(7) of the Social Security Actor
another exception applies.

Irrespective of when a person
applies for their visa or when their visa is granted by the
Department of Immigration and Citizenship, the new measure applies
to a person who is in Australia holding a visa in a class of visas
for the purpose of paragraph 739A(8)(c), and who applies for
special benefit on or after 1 January 2012.

Examples of the operation of new
subsection 739A(8) of the Social Security Act follow.
These examples refer to a visa
subclass called ‘visa subclass XYZ’. This
subclass of visas has been named, and is referred to, for
illustrative purposes only and does not represent any particular
extant subclass of visas.

Example
1

For the purposes of
this example:

- visa subclass XYZ is
a visa in a class of visas determined by the Minister for the
purposes of paragraph 739A(8)(c) of the Social Security Act;
and

- subparagraph
729(2)(f)(v) of the Social Security Act applies to Jennifer;
and

- Jennifer is a
‘family member’ of a person who has lawfully been a
permanent resident of Australia for a continuous period of not less
than two years, for paragraph 3(1)(g) of the Social Security
Legislation Amendment (Newly Arrived Resident’s Waiting
Periods and Other Measures) Act 1997 (the 1997 Act).

Jennifer applies for
a visa subclass XYZ on 1 May 2011, is granted the visa on 1 October
2011 and enters Australia on 1 November 2011.

Jennifer applies for
special benefit on 1 December 2011.

As her claim for
special benefit is lodged prior to 1 January 2012, new
subsection 739A(8) of the Social Security Act does not apply
to Jennifer (paragraph 739A(8)(a)).

Therefore, paragraph
3(1)(g) of the 1997 Act applies to Jennifer and, if she is
qualified for special benefit under section 729 of the Social
Security Act, she will not be subject to the newly arrived
resident’s waiting period under section 739A (because of the
operation of paragraph 3(1)(g) of the 1997 Act).

Example
2

For the purposes of
this example:

- visa subclass XYZ is
a visa in a class of visas determined by the Minister for the
purposes of paragraph 739A(8)(c) of the Social Security Act;
and

- subparagraph
729(2)(f)(v) of the Social Security Act applies to Raymond;
and

- Raymond is a
‘family member’ of a person who is an Australian
citizen, for paragraph 3(1)(e) of the Social Security
Legislation Amendment (Newly Arrived Resident’s Waiting
Periods and Other Measures) Act 1997 (the 1997 Act).

Raymond applies for
a visa subclass XYZ on 1 May 2011, is granted the visa on 1 October
2011 and enters Australia on 1 November 2011.

Raymond applies for
special benefit on 1 November 2012.

As his claim for
special benefit is lodged after 1 January 2012, new
subsection 739A(8) of the Social Security Act applies to
Raymond (paragraph 739A(8)(a)).

Subsection 739A(8)
has the effect that paragraph 3(1)(e) of the 1997 Act does not
apply to Raymond. Therefore, if Raymond is qualified for
special benefit under section 729 of the Social Security Act, he
will be subject to the newly arrived resident’s waiting
period under section 739A and special benefit will not be payable
to Raymond until the end of that period (unless an exception, other
than paragraph 3(1)(e) or (g) of the 1997 Act, applies to his
situation).

Example
3

For the purposes of
this example:

- visa subclass XYZ is
a visa in a class of visas determined by the Minister for the
purposes of paragraph 739A(8)(c) of the Social Security Act;
and

- subparagraph
729(2)(f)(v) of the Social Security Act applies to Benjamin;
and

- Benjamin is a
‘family member’ of a person who is an Australian
citizen, for paragraph 3(1)(e) of the Social Security
Legislation Amendment (Newly Arrived Resident’s Waiting
Periods and Other Measures) Act 1997 (the 1997 Act).

Benjamin applies for
a visa subclass XYZ on 1 May 2011, is granted the visa on 1 October
2011 and enters Australia on 1 November 2011.

Benjamin applies for
special benefit on 1 December 2011.

As his claim for
special benefit is lodged prior to 1 January 2012, new
subsection 739A(8) of the Social Security Act does not apply
to Benjamin (paragraph 739A(8)(a)).

Therefore, paragraph
3(1)(e) of the 1997 Act applies to Benjamin and, if he is qualified
for special benefit under section 729 of the Social Security Act,
he will not be subject to the newly arrived resident’s
waiting period under section 739A (because of the operation of
paragraph 3(1)(e) of the 1997 Act).

Benjamin remains on special
benefit for three weeks. He finds casual employment on 20
December 2011 and, as a result, his special benefit is
cancelled.

After three months,
Benjamin’s employment ends, and he claims special benefit
again on 1 March 2012.

As his new claim for
special benefit is lodged after 1 January 2012, new
subsection 739A(8) of the Social Security Act applies to
Benjamin in relation to that new claim (paragraph
739A(8)(a)).

Subsection 739A(8)
has the effect that paragraph 3(1)(e) of the 1997 Act does not
apply to Benjamin in relation to his new claim for special
benefit. Therefore, if Benjamin is qualified for special
benefit under section 729 of the Social Security Act, he will be
subject to the newly arrived resident’s waiting period under
section 739A and special benefit will not be payable to Benjamin
until the end of that period (unless an exception, other than
paragraph 3(1)(e) or (g) of the 1997 Act, applies to his
situation).

Schedule 3
- Impairment Tables for disability
support pension

Summary

As part of the Disability Support Pension - Better and Fairer
Assessments 2009-10 Budget
measure , the Government undertook to update the Tables
for the Assessment of Work-related Impairment for Disability
Support Pension (the Impairment Tables) to ensure that they are
consistent with contemporary medical and rehabilitation
practice. This Schedule removes the current outdated
Impairment Tables from 1 January 2012, and enables the Minister to
introduce new Impairment Tables through a legislative
instrument.

Background

This measure was announced in
the 2009-10 Budget. It is an important element of the
Government’s reforms to disability support pension to make it
simpler, fairer and sustainable for those who need it.

Disability support pension
provides income support to people who, because of an ongoing
physical, intellectual or psychiatric impairment are prevented from
working or from being re-trained for work. This qualification
for disability support pension requires, amongst other things, that
a person’s impairment is of 20 points or more under the
Impairment Tables.

The Impairment Tables are
currently in Schedule 1B to the Social Security Act, and are used
in the assessment of a person’s work-related
impairments. This assessment is used in determining a
person’s qualification for disability support
pension.

An important element of the
Government’s reform of the disability support pension has
been a comprehensive review, by medical and allied health experts
and disability advocates, of the current Impairment Tables.
Announced in the 2009-10 Budget, this will ensure the Impairment
Tables are in line with contemporary medical and rehabilitation
practices and modern expectations about functional ability.
The Impairment Tables were last reviewed in 1993.

An Advisory Committee was
established to oversee the review of the current Impairment Tables
and provide advice on updating the Impairment Tables, drawing on
consultations with the medical, allied health and rehabilitation
sector, disability peak bodies, mental health advocates and
relevant Government agencies.

This Schedule provides that the
Minister may make a legislative instrument setting out the new
Impairment Tables and guidelines containing the rules relating to
the new Impairment Tables. The Minister has committed to
consult widely on the introduction of the new Impairment
Tables.

The placement of the Impairment
Tables in a legislative instrument will enable the Impairment
Tables to be updated regularly in response to developments in
medical or rehabilitation practice.

The amendments made by this
Schedule commence on 1 January 2012.

Explanation of
the changes

Item 1 is consequential to the repeal
of Schedule 1B to the Social Security Act by item 4 .
Item 1 repeals the definition of ‘Impairment
Tables’ in subsection 23(1) of the Social Security Act
and substitutes a new definition of ‘Impairment Tables’
in subsection 23(1). The new definition of ‘Impairment
Tables’ reflects the movement of the Impairment Tables from
Schedule 1B to the Social Security Act to a legislative instrument
made by the Minister under new subsection 26(1) as introduced by
item 2 .

Item 2 inserts new sections 26 and
27. These new sections establish the framework for the new
Impairment Tables.

New subsection 26(1) inserts a
power for the Minister to make a legislative instrument containing
tables relating to the assessment of work-related impairment for
disability support pension and the rules for applying the
tables. These will also be referred to as the
‘Impairment Tables’.

New subsection 26(2) provides
that an instrument made under subsection 26(1) may contain
such ancillary or incidental provisions relating to the Impairment
Tables as the Minister considers appropriate.
‘Ancillary or incidental provisions’ include rules that
are applicable to a particular table in the Impairment
Tables.

New subsection 26(3) provides
that the Minister may, in a legislative instrument made under
subsection 26(1), set out rules that must be complied with in
applying the Impairment Tables and the ancillary or incidental
provisions made under new subsections 26(1) and (2). Concepts
fundamental to the determination of impairment ratings will be
contained in the rules made under this new subsection.

New subsection 26(4) provides
that an instrument made under subsection 26(1) may contain
such ancillary or incidental provisions relating to the rules for
applying the Impairment Tables as the Minister considers
appropriate. ‘Ancillary or incidental provisions’
include rules that are relevant to the application of all of the
Impairment Tables.

New section 27 sets out the
regime for the application of the Impairment Tables and rules for
applying the Impairment Tables.

New subsection 27(1) provides
that if a person makes a new claim, or is taken to have made a new
claim for disability support pension, the Impairment Tables to
apply in determining whether the person is qualified for disability
support pension are the Impairment Tables in effect at the date the
person makes the claim, or is taken to have made the claim.
This is so even if the Impairment Tables were amended within the 13
weeks of the date of claim.

The note
to new subsection 27(1) refers the reader to sections 12, 13 and 15
of the Social Security (Administration) Act 1999 (the
Administration Act) and clause 4 of Schedule 2 to that Act.
These provisions address when claims for disability support
pension are taken to have been made.

New subsection 27(2) provides
that if the Secretary makes a decision in relation to a claim
referred to in subsection 27(1) (the original decision) and the
Secretary, the Social Security Appeals Tribunal (the SSAT) or the
Administrative Appeals Tribunal (the AAT) is reviewing the original
decision or a later decision arising out of the original decision,
the Secretary, the SSAT or the AAT must apply the Impairment Tables
in effect at the date the person made the claim, or was taken to
have made the claim.

The note to new subsection 27(2)
informs the reader and clarifies that the effect of subsection
27(2) is that any change to the Impairment Tables between the date
of making of a claim to the making of a decision on the review must
be disregarded.

New
subsection 27(3) provides that if a person is receiving disability
support pension and the Secretary gives the person an assessment
notice under subsection 63(2) (‘Requirement to attend
Department etc.), or subsection 63(4) (‘Requirement to
undergo medical examination etc.’), of the Administration
Act, in assessing the person’s qualification for disability
support pension, the Secretary must apply the Impairment Tables in
force on the day that the assessment notice was given.

New subsection 27(4) provides
that if, after assessing the person’s qualification, the
Secretary makes a determination under section 80 of the
Administration Act to either cancel or suspend the person’s
payment of disability support pension, and the Secretary, the SSAT
or the AAT reviews that determination or a later decision arising
out of that determination, then the Secretary, the SSAT or the AAT
must apply the Impairment Tables in effect at the date that the
assessment notice was given.

The note to new subsection 27(4)
informs the reader and clarifies that the effect of subsection
27(4) is that any change to the Impairment Tables between the
giving of the assessment notice to the making of a decision on the
review must be disregarded.

The effect of section 27 is to
apply the Impairment Tables in force and fix the Impairment Tables
in time for the consideration of a new claim or, where a person is
already receiving disability support pension, a review of
qualification, from the date of claim or review throughout any
subsequent appeal process (if any) until the final determination of
the claim or review.

Item 3 repeals note 2 after subsection
94(1) and substitutes new note 2. The new note reflects the
amendments to the Social Security Act which insert new section 26
and 27 and refers the reader to the new sections when considering
Impairment Tables.

Item 4 repeals the current Impairment
Tables.

Item 5 sets out the application
provision which sets out the persons to whom the amendments made by
this Schedule will apply.

Subitem 5(1) provides that, for
the purposes of working out a person’s qualification for
disability support pension in respect of days on or after
1 January 2012, the changes made by items 1, 2 (to the
extent that it inserts section 26 of the Social Security Act), 3, 4
and 5 apply. Therefore, the new Impairment Tables must be
used after 1 January 2012 to work out qualification for
disability support pension. The phrase ‘working out a
person’s qualification’ is sufficiently broad to
include new claims, review of a person’s qualification and
reconsideration of a decision to suspend after
1 January 2012.

Subitem 5(2) provides that, if a
claim for disability support pension is made, or is taken to have
been made, before 1 January 2012 and the Secretary had
not determined the claim before 1 January 2012, the
changes made by items 1, 2 (to the extent that it inserts
section 26 of the Social Security Act), 3, 4 and 5 do not
apply in relation to working out a person’s qualification for
disability support pension in respect of days occurring on or
before the day on which the Secretary determines the
claim.

Therefore the new Impairment
Tables cannot be used in respect of any claims made, or taken to
have been made, before 1 January 2012 to work out
qualification for disability support pension. The current
Impairment Tables will apply to these claims.

Subitem 5(3) provides that the
rules set out in subsections 27(1) and (2) apply to claims for
disability support pension made, or taken to have been made, on or
after 1 January 2012.

Subitem 5(4) provides that the
rules set out in subsections 27(3) and (4) apply to a person
receiving disability support pension on or after
1 January 2012 regardless of whether the person started
to receive disability support pension, before, on or after
1 January 2012.

The note
to item 5 refers the reader to sections 12, 13 and 15 of the
Administration Act and clause 4 of Schedule 2 to that Act.
These provisions address when claims for disability support pension
are taken to have been made.

The
effect of the operation of clause 4 of Schedule 2 to the
Administration Act in the following situation should be noted: if a
person makes a claim on a date before 1 January 2012, is
not qualified on the date of claim but becomes qualified within 13
weeks of the date of claim on a date after
1 January 2012, the effect of the operation of clause 4
of Schedule 2 to the Administration Act is that the claim is taken
to have been made on the first day on which the person is qualified
(that is, on a date after 1 January 2012). In these
circumstances, the Impairment Tables to be applied to determine the
person’s qualification will be the Impairment Tables in force
after 1 January 2012.

Schedule 4
- Disability advocacy
services

Summary

This Schedule provides for the
introduction of a third party certification quality assurance
system for disability advocacy services. The new quality
assurance system will provider greater assurances about the quality
of disability advocacy support, by introducing mechanisms
independent from government to assess the compliance of disability
advocacy services against a tailored set of new Disability Advocacy
Standards.

Background

The need for improvement in the
quality assurance system for disability advocacy agencies has been
highlighted in a number of reviews. Most recently the 2005
Social Options review of the National Disability Advocacy
Program noted that tailored Standards should be developed for
advocacy agencies, and an independent system of auditing be
introduced similar to that in place for employment services.
Development of a robust, quality assured disability advocacy
sector will help meet the objectives of the National Disability
Strategy, and will also help meet Australia’s obligations
under the United Nations Convention on the Rights of Persons with
Disabilities.

The current quality assurance
system has not changed since 1997 and does not provide assurances
about the quality of disability advocacy support being
provided. Under the new quality assurance system, the
compliance of disability advocacy services with the new Disability
Advocacy Standards (which will be set out in a legislative
instrument) is assessed by an independent certification body over a
three year cycle. The quality assurance system is based on
the Joint Accreditation System of Australian and New Zealand
(JAS-ANZ), under which JAS-ANZ is the accreditation body that
accredits certification bodies to undertake certification
assessments of disability advocacy services. This third-party
certification system has been successfully in place for disability
employment services since 2002.

The new quality assurance system
has been successfully trialled and independently evaluated in
consultation with the disability advocacy services sector.
The evaluation recommended formal implementation.

The amendments made by this
Schedule commence the day after Royal Assent.

Explanation of
the changes

Accreditation and
certification

Items 3, 4, 5 and 6 of this
Schedule make amendments to the Disability Services Act 1986
(the Disability Services Act) that are relevant to
accreditation and certification.

Item 6 inserts new section 6DA
into the Disability Services Act. New section 6DA deals
with certification of advocacy services. This provision is
expressed in similar terms to existing sections 6D (employment
services) and 6E (rehabilitation services) of the Disability
Services Act.

New subsection 6DA(1)
provides that, if an accredited certification body is requested by
a State, or by an eligible organisation, to give the State, or
eligible organisation, a certificate under this section in respect
of a disability advocacy service being so provided by either the
State or the eligible organisation, and if the accredited
certification body is satisfied that the State or eligible
organisation’s disability advocacy service meets the advocacy
standards, then the accredited certification body must issue a
certificate of compliance to the State or eligible organisation
stating that the advocacy standards have been met. This
certificate is called a certificate of
compliance .

New subsection 6DA(2)
provides that, in the circumstances where a State or eligible
organisation holds a certificate of compliance but then ceases to
meet the advocacy standards, the accredited certification body
must, by written notice given to the State or eligible
organisation, revoke the certificate.

New subsection 6DA(3)
provides that, where an accredited certification body either gives,
or revokes, a certificate of compliance for a State or eligible
organisation, the accredited certification body must, as soon as
practicable, notify the Secretary in writing of the reasons for
either the giving of, or the revoking of, the
certificate.

New subsection 6DA(4)
provides that a certificate of compliance continues to be in force
until it is revoked under new subsection 6DA(2) or, in a case
where the accredited certification body that issued the certificate
of compliance itself ceases to be accredited, until the end of the
period of 3 months from the time that the certification body ceases
to be accredited.

New subsection 6DA(5) makes
it clear that a certificate made under subsection 6DA(1) is not a
legislative instrument for the purposes of section 5 of the
Legislative Instruments Act 2003 . This provision is included to
assist readers, as the instrument is not a legislative instrument
within the meaning of section 5 of the Legislative Instruments
Act. In other words, this provision is merely declaratory of
the law.

Items 3, 4 and 5
are consequential to item 6 and amend definitions in
section 6A of the Disability Services Act.

Item 3 inserts a reference to new
section 6A in the definition of ‘certificate of
compliance’. The definition of ‘certificate of
compliance’ will apply to an accredited certification body
that may give certificates of compliance in relation to advocacy
services.

Item 4 inserts a new
subparagraph (ia) in the definition of ‘certifying
functions’. Advocacy services must also comply with
relevant key performance indicators set out in the disability
advocacy standards.

Item 5 amends paragraph (b) of the
definition of certifying functions’ by including advocacy
services.

The accompanying note explains
to the reader that there is a minor amendment to the heading of
section 6D which inserts the words ‘providers of
employment services’ in place of ‘States or eligible
organisation’.

Convention

Item 9 inserts into section 7 of
the Disability Services Act a new defined term,
‘Disabilities Convention’. ‘Disabilities
Convention’ is defined as the Convention on the Rights of
Persons with Disabilities done at New York on
13 December 2006 that was ratified by the Australian
Government in 2008. This definition has been inserted into
the Act to reflect that Australia is a party to the
Convention.

The accompanying note informs
the reader of where to find the text of the Convention.

Advocacy
services

Items 7, 8,
11 , 12
and 23 make amendments relevant to the definition of and
approval of additional advocacy services.

Item 7 inserts a new definition of
‘advocacy service’ into section 7 of
the Disability Services Act. This definition reflects
the findings of the National Disability Advocacy Framework
developed under the National Disability Agreement as enabling
people with disability to participate in the decision-making
processes that safeguard and advance their human rights as provided
by the Disabilities Convention. There are three broad types
of ‘advocacy service’, comprising two current types and
a third type which could be approved by the Minister in the
future.

The first type of advocacy
service is a service that seeks to support persons with
disabilities to exercise their rights and freedoms, being rights
and freedoms recognised or declared by the Disabilities Convention
through either one-to-one support between the service and the
person with disability or through the service supporting the
person with disability to advocate for themselves, whether
individually, through a third party (for example, their guardian)
or on a group basis (subsection 7(a) refers). This type of advocacy
service is known as individual advocacy.

The second type of advocacy
service is a service that seeks to introduce and influence
long-term changes to ensure that the rights and freedoms of persons
with disabilities (being rights and freedoms recognised or declared
by the Disabilities Convention) are attained and upheld so as to
positively affect the quality of the lives of persons with
disabilities (subsection 7(b) refers). This type of advocacy
service is known as systemic advocacy.

The third type of an advocacy
service, and one that involves the Minister approving a new class
of services, can be found in new subsection 7(c), which states
that an advocacy service is a service that is included in a class
of services that has been approved by the Minister under new
section 9B of the Disability Services Act.

Item 12 inserts new section 9B at
the end of Division 1 of Part II of
the Disability Services Act. New section 9B gives
the Minister the power to approve a class of services for the
purposes of paragraph (c) of the definition of ‘advocacy
service’ (see item 7 ). The Minister may, by
legislative instrument, approve a class of service if the Minister
is satisfied that the provision of a service in that class of
service would do two things: further the objects of the Act as set
out in section 3 and the principles and objectives formulated
under section 5, and further the implementation of the
Disabilities Convention.

Item 23 is consequential to item
12 . Item 23 amends paragraph 33(1)(ca) of
the Disability Services Act. This provision inserts new
paragraph 33(1)(caa) so that the Minister may delegate her or
his power to approve additional advocacy services under new
section 9B.

Items 8 and 11 are consequential
to item 7 . Item 8 repeals the current definition of
the term ‘advocacy services’. Item 11
repeals paragraph (b) of the definition of ‘eligible
service’ in section 7 of the Disability Services
Act.

Disability advocacy standards
- introduction of the standards, failure to meet the
applicable standards or hold a certificate of
compliance

Presently the Act provides for
three sets of standards to be observed: eligibility standards to be
observed by providers of eligible services; disability employment
standards to be observed by providers of disability employment; and
rehabilitation program standards to be observed by providers of
rehabilitation programs.

Items 1 , 2 and 10
introduce standards applicable to providers of disability advocacy
services. Items 15 , 16 , 17
and 18 address the consequences for a provider if they
fail to meet the standards or hold a certificate of compliance
against the standards.

Introduction of the
standards

Item 10 inserts, into section 7 of
the Disability Services Act , a definition of
‘disability advocacy standards’.
‘Disability advocacy standards’ means the standards
determined by the Minister under paragraph 5A(1)(ba) in
relation to the provision of an advocacy service.

Item 1 inserts
new paragraph 5A(1)(ba) in subsection 5A(1), and
provides that the Minister may, by legislative instrument,
determine that disability advocacy standards are to be observed
when a provider or a service provides an ‘advocacy
service’.

Item 2 inserts a reference to advocacy
standards in subsection 5A(2) and provides that, once the
Minister has determined standards in relation to advocacy standards
(see item 1 ), the Minister must then, by legislative
instrument, approve key performance indicators to be applied in
assessing whether the standards have been observed.

Failure by the providers to meet
the applicable standards or to hold a certificate of
compliance

Item 15 repeals subsections 14GA(1)
and (2) of the Disability Services Act, and substitutes new
subsections 14GA(1) and (2). The new subsections remove
references to section 12AB (because this section is now spent)
but refer to the new disability advocacy services.

New paragraph 14GA(1)(a)
provides that new section 14GA (consequences of the failure to
hold certificate of compliance) applies where an eligible
organisation is receiving a grant of financial assistance in
respect of the provisions of an employment service or a disability
advocacy service and the organisation is in breach of the
condition of grant as prescribed by subsection 12AD(5) (in
respect of an employment service) or subsection 13(6) (in
respect of an advocacy service).

New subsection 14GA(2)
states that, where an organisation fails to hold a certificate of
compliance, the Minister may make a declaration stating that the
organisation is in breach of that condition of the grant of
financial assistance (paragraph 14GA(2)(a) refers). New
paragraph 14GA(2)(b) provides that the Minister’s
declaration will specify what actions will be taken as a result of
the organisation’s breach of that condition.

Item 16 amends paragraph 14GA(3)(a)
of the Disability Services Act. The amendment omits the
words “specified under paragraph (2)(a)” and
substitutes the phrase “referred to in
subsection 12AD(5) or 13(5), as the case
requires”. This amendment incorporates the introduction
of advocacy services whilst maintaining the reference to employment
services.

Items 17, inserts a provision
that a declaration made under new subsection 14GA(2) is
not a legislative instrument for the purposes of section 5 the
Legislative Instruments Act 2003 as it is not legislative in
nature. This provision is included to
assist readers, as the instrument is not a legislative instrument
within the meaning of section 5 of the Legislative Instruments
Act. In other words, this provision is merely declaratory of
the law.

Item 18 amends paragraph 14J(1)(a)
by omitting the phrase “or an employment service” and
substitutes the words “an employment service or an advocacy
service” to incorporate the introduction of an advocacy
service.

Amendment to Division 2 of Part
II of the Disability Services Act - Grants for eligible
services and research and development activities

Item 13 amends subsection 12AE(4)
of the Disability Services Act: the word “Part” is
to be substituted by the word “Division”.

New Division 3 of Part II of
the Disability Services Act - Grants of financial
assistance for disability advocacy services

Item 14 inserts new Division 3 after
Division 2A of Part II of the Disability Services
Act.

Part II of
the Disability Services Act contains provisions relating to
approval of grants of financial assistance for the provision of
services.

New Division 3, which is
inserted by item 14 , deals with grants for advocacy
services.

New section 13 sets out the
conditions for approval of a grant of financial assistance for
advocacy services.

New subsection 13(1)
provides that the Minister may approve the making of a grant of
financial assistance to a State, or to an eligible organisation,
where the State or eligible organisation is providing disability
advocacy services for persons included in the target
group.

New subsection 13(2) sets
out the criteria the Minister must take into account when approving
a grant of financial assistance under new
subsection 13(1).

First, the Minister must be
satisfied that the making of the grant would further the objects of
the Disability Services Act as set out in section 3 and
the principles and objectives formulated under section 5 (new
subparagraph 13(2)(a)(i) refers) and that the making of
the grant would comply with the guidelines formulated under
section 5 that are applicable to the making of grants under
subsection 13(1) (new subparagraph 13(2)(a)(ii)
refers).

In addition to both these
criteria being fulfilled, the State or eligible organisation (as
applicable) must already hold a current certificate of compliance
in respect of a disability advocacy service, or the Minister
must have determined a day (under new section 13) by which the
State or eligible organisation must obtain a certificate of
compliance, and the State or eligible organisation must have given
a written undertaking to obtain its certificate by that
date.

New subsections 13(3) and
13(4) relate to Ministerial determinations.
New subsection 13(3) provides that the Minister may make
a determination specifying a day for the purposes of
subparagraph 13(2)(b)(ii). That is, the Minister may
make a determination specifying a day by which the State or
organisation must obtain their certificate of
compliance.

New subsection 13(4)
applies where subparagraph 13(2)(b)(ii) applies. This
new subsection provides that the Minister may vary a determination
under subsection 13(3) to specify a later day in which a State
or eligible organisation may obtain its certificate of compliance
in respect of the advocacy service it provides. The Minister
cannot specify a date later than 18 months after the day on
which the grant of financial assistance is
approved.

The date of grant of financial
assistance may be made on a different day to the determination
under subparagraph 13(2)(b)(ii). Subsection 13(4)
ensures that the State or eligible organisation has 18 months in
which to obtain its certificate of compliance from the date of
grant. This provision takes into account that a service may
need that timeframe to meet the new Standards in order to obtain
its certificate of compliance.

New subsection 13(5) sets
out statutory conditions which attach to a grant of financial
assistance in relation to the period of time a State or eligible
organisation must hold a certificate of compliance. Subject
to new paragraphs 13(5)(a) and 13(5)(b), a grant of
financial assistance can only be made to a State or eligible
organisation which is providing an advocacy service where the State
or eligible organisation holds a current certificate of compliance
in respect of that advocacy service.

If a State or eligible
organisation holds a current certificate of compliance in respect
of an advocacy service at the time the grant of financial
assistance is approved, new paragraph 13(5)(a) provides that
the State or eligible organisation must continue to hold a
certificate of compliance for the entire period to which the grant
of financial assistance relates.

If a grant of financial
assistance to a State or eligible organisation for an advocacy
service is approved, and the State or eligible organisation does
not hold a certificate of compliance at the time the grant of
financial assistance is approved, the State or eligible
organisation must obtain a certificate of compliance by, or before,
the day determined by the Minister and continue to hold the
certificate of compliance for so much of remaining period to which
the grant relates (new subparagraphs 13(5)(b)(i) and
(ii)).

New subsection 13(6) makes
it clear that approvals and determinations made under new
subsection 13(1) and new subsection 13(3) are not
legislative instruments for the purposes of section 5 of the
Legislative Instruments Act 2003 as they are not
legislative in nature. This provision is included to
assist readers, as the instrument is not a legislative instrument
within the meaning of section 5 of the Legislative Instruments
Act. In other words, this provision is merely declaratory of
the law.

New section 14 provides for
ancillary provisions relating to grants of financial assistance in
respect of disability advocacy services.

New subsection 14(1)
provides that without limiting the power the Minister has to
approve a grant of financial assistance in relation to the
provision of a disability advocacy service under new
subsection 13(1). The Minister may also approve a grant
of financial assistance in relation to any of the following
matters:

· recurrent
expenditure incurred or to be incurred by (new
paragraph 14(1)(a));

· the cost of
acquiring land (with or without buildings) (new
paragraph 14(1)(b));

· the costs of
acquiring, altering or installing equipment - new
paragraph 14(1)(d)).

New subsection 14(2)
provides that, wherever the Minister approves the making of a grant
of financial assistance under new subsection 13(1), subject to
new subsection 14(4) and the regulations, the Minister must
also determine:

· the amount of
financial assistance or the manner in which the amount of the
financial assistance is to be calculated
(new paragraph 14(2)(a));

· the time, or times,
at which the instalments (if any) in which the financial assistance
is to be paid (new paragraph 14(2)(b)); and

· any other terms and
conditions on which the financial assistance is granted (new
paragraph 14(2)(c)).

New subsection 14(3)
provides examples of the types of terms and conditions the Minister
may wish to incorporate into a grant of financial assistance.
The list provided is not exhaustive and does not limit the
operation of new paragraph 14(2)(c).

New subsection 14(4)
provides that, in the event that a grant of financial assistance is
paid under Division 3 of Part II by instalments, all monies to
be paid by instalments must be paid to the disability advocacy
service within 5 years after the approval of the making of the
grant of financial assistance.

New subsection 14(5) makes
it clear that a determination made by the Minister under new
subsection 14(2) is not a legislative instrument for the
purposes of section 5 the Legislative Instruments Act
2003 as it is not legislative in nature. This provision is
included to assist readers, as the instrument is not a legislative
instrument within the meaning of section 5 of the Legislative
Instruments Act. In other words, this provision is merely
declaratory of the law.

Amendments to Division 4 of
Part II of the Disability Services Act — miscellaneous

Items 19, 20, 21 and 22 make
consequential amendments to various sections in Division 4 of
Part II of the Disability Services Act (which contains
miscellaneous provisions).

Item 21 repeals subsection 14K(2) of
the Disability Services Act. Subsection 14K(2) has
been repealed because there are no longer any transitional
employment services. Item 19 is consequential upon
item 21 and omits the reference to subsection (1) from
section 14K.

The accompanying note informs
the reader that the heading to section 14K will be amended by
omitting the phrase “Division 2, or Subdivision A of Division
2A, of” to reflect that section 14K will be retitled
“Review of services funded under
Part II”.

Item 20 omits the words “or an
employment service” from subsection 14K(1) and
substitutes the words “an employment service or an advocacy
service”.

Item 22 omits the words “or an
employment service” from paragraph 15(4)(a) and
substitutes the words “an employment service or an advocacy
service”.

Saving
provisions

Item 24 is a saving provision in
relation to accrediting authorities. A current
accrediting authority will remain accredited under section 6B
of the Disability Services Act despite the amendments made by
this Schedule. Further, any accreditations made under section
6C by the authority will continue to be in force. Therefore
the amendments made by items 4 and 5 have no effect on the validity
of any approval or accreditation in force immediately before the
commencement of items 4 and 5.

Item 25 is a saving provision in
relation to existing grants in respect of advocacy services.
The Disability Services Act, as in force immediately before
the commencement of this Schedule, continues to apply on and after
the commencement in relation to grants of financial assistance
approved before that commencement in respect of advocacy
services.

Item 26 is a saving provision in
relation to existing declarations of failure to hold a certificate
of compliance. Any declarations made under
subsection 14GA(2) of the Act in effect at the time the
amendments made by this Schedule come into effect, continue to have
effect on and after the commencement of new subsection
14GA(2).

Schedule 5
- Asset-test exempt income
streams

Summary

This Schedule makes a number of
amendments aimed at enhancing and improving the integrity of
treatment of certain asset-test exempt income streams.

Background

Under the social security law,
lifetime and life expectancy income streams receive concessional
treatment for the assets test provided they meet the requirements
under sections 9A and 9B of the Social Security Act.
This means that the asset value of the income stream is not
taken into account when determining whether a social security
payment is payable to a person.

Similarly, the
Veterans’ Entitlements Act 1986 (the Veterans’
Entitlements Act), in sections 5JA and 5JB, also extends a
concessional treatment under its assets test when the equivalent
requirements are met.

Over time, the effectiveness of
the policy measures designed to ensure that the requirements of
sections 9A and 9B under the social security law (and sections 5JA
and 5JB of the Veterans’ Entitlements Act) are being met has
been reduced in relation to the operation of self managed
superannuation funds (SMSFs) and small APRA funds (SAFs).
This has resulted in inequity between social security recipients
and veterans’ affairs pensioners, as inconsistencies in the
treatment of these products has led to some social security
recipients and veterans’ affairs pensioners receiving
concessions and a higher rate of social security or veterans’
entitlements payment without meeting their reciprocal
responsibilities.

The amendments in this Schedule
are intended to strengthen the existing income stream rules and
clarify existing policy in relation to these products.

Social security recipients and
veterans’ affairs pensioners who have lifetime or life
expectancy income streams are required to provide the Secretary
with an actuarial certificate stating that there is a high
probability that the provider of the income stream will be able to
pay the income stream as required under the contract or governing
rules for the term of the income stream. The Social
Security (Actuarial Certificate - Life Expectancy Income
Stream Guidelines) Determination 2003 and the Social
Security (Actuarial Certificate - Lifetime Income Stream
Guidelines) Determination 2003 provide guidelines on what constitutes a
high probability or positive opinion that the provider of the
income stream will be able to pay the income stream as required
under the contract or governing rules, in order for that income
stream to be an asset-test exempt income stream.

As a general rule, the period in
which these certificates are in force, for social security and
veterans’ entitlements purposes, is 12 months.
Customers have a 26 week period from the date their current
actuarial certificate ceases to be in force in which to provide a
new certificate.

Due to changes in economic and
market conditions, the probability that a provider of an income
stream will be able to pay the income stream as required under the
contract or governing rules could fluctuate quite markedly, even
over a short period of time. As a result, some social
security customers provide the Secretary (and, in similar
circumstances, veterans’ affairs pensioners to provide the
Repatriation Commission) with actuarial certificates that fail to
meet the high probability test (which results in their income
stream becoming subject to the assets test) within the 26 week
grace period, until they obtain a favourable certificate that meets
the high probability test.

This Schedule clarifies that
SMSFs and SAFs can only give the Secretary (or the Repatriation
Commission) one actuarial certificate for each financial year to
show that the fund has sufficient resources to pay an income stream
for its term. In the event that a person gives the Secretary (or
the Repatriation Commission) more than one certificate for a
particular financial year, only the first certificate given will
have effect, not any of the subsequent certificates. If the
first actuarial certificate does not meet the high probability
test, the income stream will lose its asset-test
exemption.

This Schedule also clarifies
that the grace period in which a person must provide a new
actuarial certificate for an income stream applies from the
beginning of the particular financial year (that is, from 1 July)
and ends either when a new actuarial certificate is given to the
Secretary (or the Repatriation Commission) in relation to that
income stream for that financial year, or at the end of the period
of 26 weeks beginning on 1 July of that financial year. If a
person does not give the Secretary (or the Repatriation Commission)
a new actuarial certificate in relation to the income stream by the
end of the 26 week period, the income stream will lose its
asset-test exemption.

The amendments made by this
Schedule commence the day after Royal Assent.

Explanation of
the changes

Part 1 -
Amendments

Amendments to the Social
Security Act

Item 1 makes a minor technical
amendment to paragraph 9A(1)(b) as a result of the amendment made
by item 5 .

Items 2 and 7 remove the words
‘in the actuary’s opinion’ from
paragraphs 9A(1)(b) and 9B(1A)(b) respectively, and replace
them with ‘the actuary is of the opinion that, for the
financial year in which the certificate is given’.
These amendments clarify that the actuarial certificate must state
that in the actuary’s opinion, for the financial year in
which the certificate is given, there is a high probability that
the provider of the income stream will be able to pay the income
stream as required under the contract or governing
rules.

The reason for basing the
actuarial certificate on the financial position of the fund as at
30 June of the previous financial year is to align this requirement
under the social security law with Part 4 of the Superannuation
Industry (Supervision) Act 1993 (the SIS Act). Under the
SIS Act, trustees of superannuation funds (which includes SMSFs and
SAFs) are required to prepare an annual operating statement and an
annual statement of the financial position of the fund for the
previous financial year. By linking the actuarial certificate
to the financial year, the requirement for an actuarial certificate
under the Social Security Act will not create an additional
regulatory burden, as trustees are already required to prepare an
operating statement for the financial year from which the actuarial
assessment can subsequently be prepared.

Items 3 and 8 add a note at the
end of subsections 9A(1) and 9B(1A) respectively to alert readers
that, for paragraphs 9A(1)(b) and 9A(1A)(b), the term
‘financial year’ means a period of 12 months commencing
on 1 July.

Items 4 repeals subsections 9A(1C) and
replaces it with a new subsection 9A(1C). New subsection
9A(1C) provides an exception for lifetime income streams, in
certain circumstances, if no actuarial certificate is in
force.

New subsection 9A(1C) provides
that if, on 30 June in a financial year, there is in force an
actuarial certificate that is referred to in paragraph 9A(1)(b),
then paragraph 9A(1)(b) does not apply in relation to the next
financial year (the later year ) for a specific period of
time. That is, the requirement that the Secretary is
satisfied that there is in force a current actuarial certificate
(which states that, in the actuary’s opinion, there is a high
probability that the provider of the income stream will be able to
pay the income stream as required under the contract or governing
rules) will not apply for a defined period of time. This
period begins on 1 July of the later year and ends either at the
start of the first day that any actuarial certificate is given to
the Secretary for that income stream in that later year or at the
end of a period of 26 weeks beginning on 1 July of the later
year, whichever is earlier.

Accordingly, if on 30 June in a
financial year an actuarial certificate is in force for an income
stream that is asset-test exempt, the income stream will continue
to be asset-test exempt for the next financial year (the later
year) until the earlier of the start of the first day the Secretary
is given a new actuarial certificate that relates to the later
year, or the end of the 26 week period which commenced on 1 July of
the later year.

Item 5 inserts new subsection 9A(1D)
which makes it clear that, for the purposes of paragraph 9A(1)(b),
the Secretary will only accept one actuarial certificate for each
financial year in relation to a lifetime income stream. In
the event that a social security recipient provides further new
actuarial certificates for the same financial year for that income
stream, these certificates will have no effect on whether the
income stream meets the high probability test or not. If the
first actuarial certificate given to the Secretary fails to meet
the high probability test the income stream will lose its
asset-test exemption and become subject to the assets test.
Once the income stream loses its asset-test exemption it will
not be able to regain the exemption at a later date.

For example, a customer provides
the Secretary with an actuarial certificate dated 21 October
2012 which states that in the actuary’s opinion there is only
a 49 percent probability that the provider of the income
stream will be able to pay the income stream as required under the
contract or governing rules. (Guidelines for what constitutes
a high probability that the provider of the income stream will be
able to pay the income stream as required under the contract or
governing rules in order for that income stream to be an asset-test
exempt income are provided by the Social Security (Actuarial
Certificate—Life Expectancy Income Stream Guidelines)
Determination 2003 and the Social Security (Actuarial
Certificate—Lifetime Income Stream Guidelines) Determination
2003 ). As a result of the income stream failing to meet
the high probability test, the income stream loses its asset-test
exempt status. However, on 15 December 2012 the
customer provides the Secretary with a further actuarial
certificate which states that, in the actuary’s opinion,
there is a 75 percent probability that the provider of the income
stream will be able to pay the income stream as required under the
contract or governing rules. Although the second actuarial
certificate meets the high probability test, the Secretary cannot
accept this certificate as the Secretary has already received an
actuarial certificate for the 2012-13 financial year. As a
result, the income stream will be asset tested for the purposes of
the assets test under the social security law and cannot regain its
asset-test exemption.

Item 6 makes a minor
technical amendment to paragraph 9B(1A)(b) due to the amendment
made by item 10 .

The amendments made by items
9 and 10 have the same effect on life expectancy income streams
under section 9B as items 4 and 5 have on lifetime income
streams under section 9A of the Social Security Act.

The note at the end of item
9 signposts the insertion of a heading to subsection
9B(1D).

Amendments to the
Veterans’ Entitlements Act

Item 11 makes a minor
technical amendment to paragraph 5JA(1)(b) to insert a reference to
new subsection 5JA(1D) due to the amendment made by
item 15 .

Items 12 and 17 remove the words
‘in the actuary’s opinion’ from
paragraphs 5JA(1)(b) and 5JB(1A)(b) respectively and replaces
them with ‘the actuary is of the opinion that, for the
financial year in which the certificate is given’.
These amendments clarify that the actuarial certificate must state
that in the actuary’s opinion, for the financial year in
which the certificate is given, there is a high probability that
the provider of the income stream will be able to pay the income
stream as required under the contract or governing
rules.

The reason for basing the
actuarial certificate on the financial position of the fund as at
30 June of the previous financial year is to align this requirement
under the Veterans’ Entitlements Act with Part 4 of the
Superannuation Industry (Supervision) Act 1993 (the SIS
Act). Under the SIS Act, trustees of superannuation funds
(which includes SMSFs and SAFs) are required to prepare an annual
operating statement and an annual statement of the financial
position of the fund for the previous financial year.

By linking the actuarial
certificate to the financial year, the requirement for an actuarial
certificate under the Veterans’ Entitlements Act will not
create an additional regulatory burden, as trustees are already
required to prepare an operating statement for the financial year
from which the actuarial assessment can subsequently be
prepared.

Items 13 and 18 add a note at the
end of subsections 5JA(1) and 5JB(1A) respectively to alert readers
that, for paragraphs 5JA(1)(b) and 5JB(1A)(b), the term
‘financial year’ means a period of 12 months commencing
on 1 July.

Items 14 repeals subsections 5JA(1C) and
replaces it with a new subsection 5JA(1C). New
subsection 5JA(1C) provides an exception for lifetime income
streams, in certain circumstances, if no actuarial certificate is
in force.

New subsection 5JA(1C) provides
that if, on 30 June in a financial year, there is in force an
actuarial certificate that is referred to in paragraph 5JA(1)(b),
then paragraph 5JA(1)(b) does not apply in relation to the next
financial year (the later year ) for a specific period of
time.

That is, the requirement that
the Repatriation Commission is satisfied that there is in force a
current actuarial certificate that states in the actuary’s
opinion there is a high probability that the provider of the income
stream will be able to pay the income stream as required under the
contract or governing rules will not apply for a defined period of
time.

This period begins on 1 July of
the later year and ends either at the start of the first day that
any actuarial certificate is given to the Repatriation Commission
for that income stream in that later year or at the end of a period
of 26 weeks beginning on 1 July of the later year, whichever
is earlier.

Accordingly, if on 30 June in a
financial year an actuarial certificate is in force for an income
stream that is asset-test exempt, the income stream will continue
to be asset-test exempt for the next financial year (the later
year) until the earlier of the start of the first day the
Repatriation Commission is given a new actuarial certificate that
relates to the later year, or the end of the 26 week period which
commenced on 1 July of the later year.

Item 15 inserts new subsection 5JA(1D)
which makes it clear that, for the purposes of paragraph 5JA(1)(b),
the Repatriation Commission will only accept one actuarial
certificate for each financial year in relation to a lifetime
income stream.

In the event that a
veterans’ affairs pensioner provides further new actuarial
certificates for the same financial year for that income stream,
these certificates will have no effect on whether the income stream
meets the high probability test or not. If the first
actuarial certificate given to the Repatriation Commission fails to
meet the high probability test, the income stream will lose its
asset-test exemption and become subject to the assets test.
Once the income stream loses its asset-test exemption it will not
be able to regain the exemption at a later date.

For example, a customer provides
the Repatriation Commission with an actuarial certificate dated
21 October 2012 which states that in the actuary’s
opinion there is only a 49 percent probability that the
provider of the income stream will be able to pay the income stream
as required under the contract or governing rules.
(Guidelines for what constitutes a high probability that the
provider of the income stream will be able to pay the income stream
as required under the contract or governing rules in order for that
income stream to be an asset-test exempt income are provided by the
Veterans’ Entitlements (Actuarial Certificate—Life
Expectancy Income Stream Guidelines) Determination 2009 and the
Veterans’ Entitlements (Actuarial
Certificate—Lifetime Income Stream Guidelines) Determination
2009 ). As a result of the income stream failing to meet
the high probability test, the income stream loses its asset-test
exempt status. However, on 15 December 2012 the
customer provides the Repatriation Commission with a further
actuarial certificate that states in the actuary’s opinion
there is a 75 percent probability that the provider of the
income stream will be able to pay the income stream as required
under the contract or governing rules. Although the second
actuarial certificate meets the high probability test, the
Repatriation Commission cannot accept this certificate as the
Repatriation Commission has already received an actuarial
certificate for the 2012-13 financial year. As a result,
the income stream will be asset tested for the purposes of the
assets test under the Veterans’ Entitlements Act and cannot
regain its asset-test exemption.

Item 16 makes a minor
technical amendment to paragraph 5JB(1A)(b) to insert a reference
to new subsection 5JB(1E) due to the amendment made by item
20 .

The amendments made by items
19 and 20 have the same effect on life expectancy income
streams under section 5JB as items 14 and 15 have on
lifetime income streams under section 5JA of the Veterans’
Entitlements Act.

Part 2 -
Application and transitional provisions

Item 21 is an
application and transitional provision for the amendments made
under Part 1 of this Schedule.

Subitem
21(1) provides
that the
amendments made by items 2, 5, 7, 10, 12, 15, 17 and 20 apply in
relation to the financial year beginning on 1 July 2012 and
all later financial years.

Subitem 21(2) provides that the
amendments made by items 4, 9, 14 and 19 apply in relation to the
financial year ending on 30 June 2012 and all later financial
years.

Subitem 21(3) provides a
transitional rule for income streams that have an actuarial
certificate that is in force in relation to the financial year
ending on 30 June 2012. The effect of this provision is
that an actuarial certificate that is currently in force for an
income stream (immediately before the commencement of this item)
will continue to be in force until 30 June 2012, at which time a
person will need to obtain a new actuarial certificate for the next
financial year commencing 1 July 2012. The period in which a
person must provide the new actuarial certificate is provided by
the amendments made by items 4, 9, 14 and 19

For example, John obtained and
gave the Secretary an actuarial certificate which stated that, in
the actuary’s opinion, there was a high probability that the
provider of the income stream would be able to pay the income
stream as required under the governing rules for the next 12 months
(in this instance, for the period 17 August 2011 to 16 August
2012). John’s income stream has been assessed as being
asset-test exempt. However, due to the amendments being made
by this Schedule, John must now obtain a new actuarial certificate
which states, in the actuary’s opinion, what the probability
of the income stream provider being able to pay the income stream
is, for the financial year 1 July 2012 to 30 June 2013.
Although John has 26 weeks in which to provide the certificate, the
period it relates to must be for the 2012-2013 financial year
(that is, 1 July 2012 to 30 June 2013, not 17 August 2012
to 16 August 2013).

Schedule 6
- Termination
payments

Summary

This Schedule clarifies that
payments made by an employer to an employee in lieu of notice of
termination are regarded as redundancy payments for the purposes of
the social security law.

Background

The Social Security Act provides
for an income maintenance period to be applied to people who have
claimed, or are in receipt of, certain social security payments and
who have received a redundancy or leave payment.
The income maintenance period is the period in which
redundancy payments, or leave payments, are treated as income under
the Act. Income maintenance periods are applied because
people who receive leave or redundancy payments from their employer
are expected to use these payments to support themselves for a
period before turning to the social security system for
assistance.

The amendments made by this
Schedule clarify that a payment made to a person in lieu of notice
of the termination of their employment is a ‘redundancy
payment’ for the purposes of the Social Security Act.
The effect of this is that a payment in lieu of notice will be
included when calculating whether the person has to serve an income
maintenance period, and the length of that period.

The changes made by this
Schedule ensure that people who receive payments in lieu of notice
are treated in the same way as people who receive other types of
redundancy or termination payments.

The amendments made by this
Schedule apply to payments in lieu of notice made on or after the
commencement of this Schedule. The Schedule commences on the
day after Royal Assent.

Explanation of
the changes

Item 1 amends the definition of
‘redundancy payment’ contained in point 1064-F14
of Pension Rate Calculator A in the Social Security Act to refer
specifically to a payment in lieu of notice, with the effect that a
payment in lieu of notice is a redundancy payment for the purposes
of working out the rate of disability support pension for a person
who has turned 21 or who has not turned 21 but has one or more
dependent children.

Item 2 amends the definition of
‘redundancy payment’ contained in point 1066A-G14
of Pension Rate Calculator D in the Social Security Act to refer
specifically to a payment in lieu of notice, with the effect that a
payment in lieu of notice is a redundancy payment for the purposes
of working out the rate of disability support pension for a person
who has not turned 21 and has no dependent children.

Item 3 amends the definition of
‘redundancy payment’ contained in point 1067G-H19
of the Youth Allowance Rate Calculator in the Social Security Act
to refer specifically to a payment in lieu of notice, with the
effect that a payment in lieu of notice is a redundancy payment for
the purposes of working out the rate of youth allowance for a
person.

Item 4 amends the definition of
‘redundancy payment’ contained in point 1067L-D15
of the Austudy Payment Rate Calculator in the Social Security Act
to refer specifically to a payment in lieu of notice, with the
effect that a payment in lieu of notice is a redundancy payment for
the purposes of working out the rate of austudy payment for a
person.

Item 5 amends the definition of
‘redundancy payment’ contained in point 1068-G7AQ
of Benefit Rate Calculator B in the Social Security Act to refer
specifically to a payment in lieu of notice, with the effect that a
payment in lieu of notice is a redundancy payment for the purposes
of working out the rate of newstart allowance, sickness allowance,
partner allowance, mature age allowance (under Part 2.12B of the
Act) or widow allowance for a person.

Item 6 amends the definition of
‘redundancy payment’ contained in point 1068A-E12
of the Pension PP (Single) Rate Calculator in the Social Security
Act to refer specifically to a payment in lieu of notice, with the
effect that a payment in lieu of notice is a redundancy payment for
the purposes of working out the rate of parenting payment (single)
for a person.

Item 7 amends the definition of
‘redundancy payment’ contained in point 1068B-D18
of the Benefit PP (Partnered) Rate Calculator in the Social
Security Act to refer specifically to a payment in lieu of notice,
with the effect that a payment in lieu of notice is a redundancy
payment for the purposes of working out the rate of parenting
payment (partnered) for a person.

Item 8 is an application provision, and
provides that the amendments made by this Schedule apply in
relation to payments in lieu of notice made on or after the
commencement of the Schedule. The Schedule will commence on
the day after Royal Assent.